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Robert Landucci 1. There are many industrial developers who will respond to the opportunities for smaller users. Properties will be redeveloped, older areas will undergo large transitions, innovation in space and need will come into the mix, and new distribution patterns will emerge. We have seen this trend for many years and it will continue. The economics will drive the change and square foot prices will increase. “Demand for alternate uses in urban land opportunities have forced changes in thinking ” 2. Probably. But the question is, other than the real estate community and the retailers themselves looking for large-footprint buildings, does the Lower Mainland really want or need this kind of development? Some would suggest it is not in the long-term best interest of the transportation corridor, nor for the livability of the GVRD. Perhaps this demand should be looked at from a more holistic viewpoint. What does good sustainable demand look like in 2030? 3. I don’t have a good idea of what Port Metro Vancouver is doing and what its full plan looks like so I can’t answer this question. 4. It is important to look at alternatives before the ALR lands are considered. This is key. When old thinking, entrenched in false and staid assumptions, are used - mistakes will be made. This is happening today in the way other solutions are being assessed. The wealth of Canada is not created in the Lower Mainland, it is created in the mines, farms and small communities throughout BC and Canada that produce goods and sell them. We need to service them properly and keep costs low so they can compete globally. We should be looking at doing anything we can to move assembly and preparation closer to production sites and prepared for direct shipping to the docks. Why handle any product in the Lower Mainland if it doesn’t need to be handled here? The system works well for coal, wheat, potash and other commodities, why can’t it work for pulp, sawn lumber, retail goods, containers etc? It is no surprise that the urban growth in Asia and South America has caused tremendous challenges and has changed the life of millions of families. Is it for the better for them? Perhaps we can learn from what is happening in other areas and grow our economy in a manner that suits the average person. other comments: Not enough alternatives are being explored. As in other industries that have developed over the years, the demand for alternate uses in urban land opportunities have forced changes in thinking. For example: Coal harbour industries could not compete with office, hotel, retail and residential demand. The industries had to move or close. False Creek industry could not compete with the demand generated by Expo ‘86 and subsequent residential towers. Industry had to move or close. Granville Island could not compete with funky urban retail and grocery shopping trends. Industries had to move or close. Fraser River industries from New Westminster to Oak Street could not afford the land they were on. Industries had to move or close. Growth forces creative thinking for survival. There are many opportunities to service the retail distribution demand. The real question: Is it wise to do so on valuable urban lands with the retail and residential trends that are coming in the years ahead? Greg Wilks 1. I think developers need to be flexible. The first phase of our Golden Ears Business Centre has changed more than half a dozen times as we work with the needs of the market in conjunction with our own goals. Due to the lack of industrial sites in Metro Vancouver, I think we will always have developers looking to accommodate the small and mid-sized users. Onni currently has about 1.9 (msf) of small bay warehousing spec product. 2. I don’t think you can call it pressure. Perhaps the opportunity to accommodate large-scale warehousing has increased even though it would be hard to pinpoint a user willing to relocate in Metro Vancouver primarily due to the SFPR if the firm was previously adverse to entering our market. Metro Vancouver still has a lot of obstacles when accommodating large users compared with our competitors in other markets. The steps the government has taken with the recent projects such as the Golden Ears Bridge, the Port Mann/hwy. 1 expansion and the SFPR are definitely a step in the right direction to make Metro Vancouver a more desirable location. 3. I think users need to look further at non-traditional markets that can support their needs and offer competitive leasing rates while doing so. Regarding the Port Metro Vancouver leasehold deals, these were not typical market deals and I doubt they offer any relief or comfort for private investors. I think there is an issue of supply in the mid-term, but we still have options currently. That being said, Port Metro Vancouver is offering options that would otherwise not be there for tenants and investors. The lack of land for industrial development will only put further pressure on government to allow for local growth options in Metro Vancouver that the local economy will require. 4. Personally, I don’t see this happening anytime soon. I think we still have other options available before we consider inland container terminals being an affordable option. I think we will start to see higher-efficiency warehouses with higher ceiling heights, etc. before we start moving container yards. Industrial densification might be an option in the future, but we are still far from seeing densification as an economical or functional approach to industrial land use in Metro Vancouver. Leasing activity at Golden Ears Business Centre in Pitt Meadows has been gaining momentum in recent months. 4 Avison Young Metro Vancouver Industrial Overview — Spring 2013
Beth Harrington 1. When deciding the best possible use for a development site, we take a large number of factors into consideration, including: the size and configuration of the site, the location, the product demanded in that location and the development costs. In most cases, the site and market dictate the type of product we deliver. Beedie does not focus on a specific product type; rather, we develop land to meet client needs or to take advantage of the opportunities the site presents. 2. We have not experienced an increase in demand as a result of the new transportation infrastructure. From what we have seen, demand tends to be driven by specific business needs. Demand emerges from companies requiring more or less space or seeking increased efficiency in terms of a new facility or superior location. When considering a move, companies may wish to locate closer to new transportation infrastructure; however, we have not yet seen an increase in demand as a result. Beedie Group is offering several development options in Gloucester Industrial Estates, where the company has been active in recent years. 3. These transactions show there is an appetite for incomeproducing assets whether they are freehold or leasehold. Looking at Port Metro Vancouver’s leasehold transactions, instead of industrial assets on leasehold land, we can observe some relief in terms of supply. The leasehold land opportunities that Port Metro Vancouver has supplied present additional well-located land options to alleviate demand hear the ports. These sites will provide transportation and logistics companies, who have portrelated uses, excellent access to Metro Vancouver. It is important to note that these sites will not accommodate manufacturing or non-port related distribution companies. 4. Beedie has been looking at potential redevelopment opportunities throughout Metro Vancouver to provide new industrial supply. While land values have not yet reached a level which would make multi-level industrial facilities economical, we strive to provide the most efficient site coverage possible on the land we have. Utilizing high ceilings and high-density sprinkler systems, warehouse and distribution groups can more effectively use less space. Avison Young Metro Vancouver Industrial Overview — Spring 2013 Tom Corsie 1. PMV’s focus is on leading the growth of Canada’s Pacific Gateway and not on pursuing industrial developments for small to midsized bay space users. There appears to be sufficient free market interest from the industrial development community to satisfy the demand apparent within this sector. PMV is concerned the economics appear more favourable for developers to pursue largeformat buildings (that require larger sites) subdivided into smaller lease or strata units as opposed to large-format facilities designed for goods distribution. A review of weekly industrial sales materials shows significant choice of product for small to mid-sized bay users to purchase or lease, but very limited choice for available large-scale distribution sites. “Densification of the remaining industrial land supply will likely be necessary” 2. The SFPR should become a catalyst for land-use change along parts of its corridor, particularly in areas such as east Delta, Boundary Bay and at the TFN lands nearer to the Roberts Bank marine terminal complex. The SFPR is only one of many Asia Pacific Gateway infrastructure projects underway that will improve fluidity of goods movement and increase Canada’s Pacific Gateway competitiveness. PMV’s forecasts show continued growth in container traffic, which is a primary driver for large-scale distribution facility demand. hopefully, investment in SFPR infrastructure will help facilitate rather than aggravate serviced and prepared sites able to accommodate an expected increase in demand for large-scale distribution facilities. 3. This question refers to the sale of tenant assets located at PMV’s Richmond Logistics hub. In one transaction, a PMV subsidiary was a partner in the assets, which were in the form of four large distribution buildings within a fully-tenanted 80-acre development. The second transaction was the sale of three fully-tenanted largeformat distribution buildings and the third transaction was an independent large-format distribution building fully leased. We believe the sale of these assets located on leased land does provide comfort that leasehold transactions are safe and profitable, particularly when the activity is associated with trade through Canada’s Pacific Gateway. We do not believe these transactions provide any relief to the available supply of industrial land, which remains a larger issue for the Lower Mainland. 4. Although PMV owns a large parcel of agricultural land adjacent to its Richmond Logistics hub, we do not at this time have an interest in converting that land to an industrial distribution use that would support the containerized goods supply chain. It is our view that a new container terminal at Roberts Bank (Terminal 2) is the most efficient way to provide additional long-term capacity to this growing sector. PMV is currently working with the proponents of the Ashcroft facility, but it is unlikely the economic development activity they are pursuing will involve the development of an inland container terminal. New developments in warehouse automation and stacking technology could cause certain distribution companies to require higher buildings thereby increasing densification. Densification of remaining industrial land supply will likely be necessary and we believe the goods movement industry is responding. 5
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